Bank of Japan Review

October 7, 2014

A five hour 39 minute meeting of the BOJ Board ended with the release of a statement that acknowledged that business conditions appear not to have revived as much last quarter as hoped, expressed continuing confidence in an outlook of moderate recovery, positive inflation for now, and eventual attainment of sustained 2.0% core inflation.  Downgrades were made to industrial production and business sentiment, Board member Ms. Shirai objected to the assertion by the majority that inflation expectations are rising on the whole.  The Board seems confused on how to respond to positive by insufficiently strong growth and to stalled progress toward reaching the inflation target.  A second October Board meeting on the 31st will publish new forecasts for core inflation and growth.  Economic growth in fiscal 2014, the current year, was projected in October 2013 to be 1.5%, then subsequently revised to 1.4% in January 2014, 1.1% in April 2014 and 1.0% three months ago.  The latest core inflation estimate, released on July 15, 2014, penciled in 1.3% this year (excluding the effect of the consumption tax hike) and doesn’t exceed 1.9% until fiscal 2016.

Copyright 2014, Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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